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Selling into the EU from outside it: VAT, duties and a returns address

A step-by-step guide for non-EU sellers: how the €150 line shapes VAT and duty, what changed in 2026, who pays, and how to choose a returns address.

ESTASOFT
12 min read
Cover for a guide to selling into the EU from outside it, listing VAT schemes, duty and fees, product data and a returns address.
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      You sell from outside the EU, and a customer in Spain or Poland adds a product to the basket. Behind that order sit three charges: VAT, customs duty and a growing list of small fees. Someone pays each one. If you do not decide who, the customer finds out at the door, and that is when refunds and bad reviews start.

      The rules changed in 2026, so older guides are out of date. This article uses European Commission pages read on 3 November 2026. It splits the orders of your online store by parcel value, explains the VAT schemes, lists the 2026 duty and fee dates, and sets out the choices for a returns address. It does not repeat the market overview in selling from the Middle East to the UK, Europe, the US and Canada. Read that first if you are still choosing markets.

      Step 1: split your orders at €150

      The Commission draws the line at a consignment value of €150, for both VAT and duty. Your product mix and average basket decide which side most of your orders fall on.

      • Up to €150. VAT can be collected through the Import One Stop Shop (IOSS) or through special arrangements. A temporary customs duty of €3 per item applies from 1 July 2026.
      • Above €150. The €3 duty does not apply. The goods follow the standard import route, with the normal duty for the product and import VAT. The Commission's Access2Markets guide says the importer usually pays the import VAT and often pays the duty, depending on the agreement with the seller. Importers need an EORI number. The guide says importers are normally established in the EU and points to an EU-established person, such as a logistics provider or customs agent, for businesses outside it. The Union handling fee described below still applies.

      Step 2: choose how VAT is collected

      The EU's VAT rules for online sales changed on 1 July 2021. The Commission's One Stop Shop pages describe three schemes. Which one fits depends on where the goods start their journey.

      • Import scheme (IOSS) covers goods sent from outside the EU in consignments up to €150. Goods subject to excise duty cannot use it. You register in one EU country, the Commission's guide says VAT becomes due when the customer's payment is accepted, and you file a monthly return. A seller based outside the EU must appoint an EU-established intermediary to use it. The Commission's guide says the exception is a country with a mutual assistance agreement, currently only Norway. The intermediary receives a separate IOSS number for each seller it represents.
      • Special arrangements apply when a consignment up to €150 does not use IOSS. The customer pays import VAT, and the postal operator or carrier collects it and passes it on monthly.
      • Union scheme covers cross-border sales of goods to EU consumers that are dispatched from one EU country to another, for example from a warehouse. The Commission's guide says a seller outside the EU can use it for goods in scope. The country of identification is where the dispatch starts, and a seller not established there gets a VAT number from that country before registering. The guide also says goods already stored in an EU warehouse are not treated as imported distance sales. Ask your adviser what holding stock in the EU means for your VAT registration.

      Some guides mention a €10,000 threshold for cross-border sales. The Commission's page says it does not apply to distance sales of imported goods. Your Europe says businesses must keep records for up to 10 years in case of audit.

      Step 3: add the 2026 duty and fee to your landed cost

      The duty relief that used to cover small parcels ended on 30 June 2026. According to the Commission, three things now matter.

      • The €3 duty. It applies from 1 July 2026 until 1 July 2028 to goods in consignments up to €150 sold at a distance, whichever VAT scheme is used. It is charged per item by tariff classification, not by quantity. Five T-shirts count as one item and cost €3. One T-shirt and one watch count as two items and cost €6. The page also lists exceptions, for example some goods covered by preferential trade agreements, so check your products with your customs broker.
      • The €2 Union handling fee. The Commission's customs reform page says it applies from 1 November 2026, and Irish Revenue's notice of 29 September 2026 gives the same date and says it is charged per distinct item. The Commission's guidance says it applies to distance sales regardless of value, including parcels above €150, is not temporary, and cannot be refunded. The guidance also said the amount was still in a delegated act under scrutiny when it was written. At the time of writing, 3 November 2026, the start date was two days old, so ask your carrier whether it is being charged and how VAT applies to it.
      • After 1 July 2028. The Commission says the flat duty runs until then, when use of the EU Customs Data Hub is due to become mandatory for e-commerce, and that normal duties by type of goods apply after that.

      Worked example: an order of one T-shirt and one watch under €150 would carry 2 × €3 = €6 of duty. If the fee is charged per item, add 2 × €2 = €4. That is €10 before VAT, on one parcel.

      Who pays? The Commission says the duty falls on the declarant: the IOSS holder, the special arrangements user, or their indirect representative, in that order of preference. The consumer pays only in a few countries that offer a free web declaration, and only where IOSS was not used. The guidance says a non-EU IOSS holder cannot declare in its own name but can appoint an indirect representative. Irish Revenue says the seller may pass the fee on to the consumer.

      Under IOSS, the Commission's VAT addendum says the €3 duty is generally outside the taxable amount, but if you charge it to the customer at the time of sale it becomes part of the price for VAT. Ask your adviser how to show duty and fees at checkout.

      Step 4: prepare product data

      From 1 November 2026, the declarant must supply product identifiers to customs for goods in distance sales up to €150. The Commission's guidance describes a merchant identifier that you or your platform assign, a manufacturer identifier that must always be provided, and a standardised one, such as an EAN, only where it exists. Business to business flows are in principle excluded. The guidance treats deliberately using a batch or unit code where a model-level code exists as an infringement. The detail, and the product safety angle, are in EU product safety rules for online sellers outside the EU.

      Step 5: decide your returns address

      Your Europe says EU consumers have 14 days to withdraw from an online purchase without giving a reason. The consumer pays return postage unless the seller offers to pay or did not disclose the cost beforehand. The seller must refund within 14 days of being notified and may hold the refund until the goods are back or proof of sending is shown. The wider rules are in returns and refunds rules for the UK, EU, US and Canada.

      Customs adds two points. For returned distance-sale goods up to €150, the Commission's guidance says cancelling the declaration to recover the €3 duty is no longer possible for returned distance-sale goods, though other refund routes remain. The VAT addendum says VAT on the duty is refunded when goods come back under special arrangements or the standard route. Compare three options:

      1. Returns to your home country. Ask what it costs the customer, how long it takes, what paperwork the carrier needs to send goods back across the border, and whether duty and VAT can be recovered.
      2. Returns to an EU address, such as a partner or your own EU company. Ask who owns the stock once it arrives, who inspects it, how fast refunds are, and whether EU stock changes your VAT position.
      3. Refund without return for low-value items. Work out the cost per order and set limits.

      Whatever you choose, state the address and who pays return postage on the product page and at checkout before the sale. If you do not disclose the cost beforehand, the customer does not pay it.

      Key dates

      • 1 July 2021: the VAT e-commerce rules and IOSS start, the VAT exemption for imports under €22 ends, and an import declaration is required for all goods whatever their value.
      • 1 July 2026: the €3 duty starts. Product identifiers can be supplied voluntarily.
      • 1 November 2026: product identifiers become mandatory for distance sales up to €150, and the €2 Union handling fee is scheduled to start.
      • 1 July 2028: the flat €3 duty is due to end.

      Dates and phases can change. The Commission's September 2026 note says further VAT reforms adopted in 2025 will phase in and expand the OSS, so recheck before you plan a year ahead.

      Checklist before the first EU parcel

      1. Split your catalogue by typical order value around €150.
      2. Choose your VAT route: IOSS through an intermediary, or special arrangements where the carrier collects VAT from the customer.
      3. Name your declarant and confirm in writing who acts as indirect representative.
      4. Add the €3 duty and €2 fee per item to your landed cost.
      5. Decide whether prices at checkout include VAT, duty and fees.
      6. Collect product identifiers and tariff codes for every product.
      7. Write the returns address, return cost and withdrawal terms into your policy pages.
      8. Keep VAT and customs records for audit.

      Questions for your adviser or customs broker

      • Do I need an IOSS intermediary, and what do they charge?
      • Will my carrier act as indirect representative, and for which routes?
      • How is the handling fee charged today, how does VAT apply to it, and can I see it on the invoice?
      • If I hold stock in the EU, where must I register for VAT?
      • How do I treat duty and fees for VAT if I show them at checkout?
      • Which of my products need special rules, such as excise goods?

      This is general information, not legal or tax advice. Check the current rules or ask a qualified adviser before you decide.

      ESTASOFT can help you plan and build the store side of this, such as price display, shipping options and policy pages, through its eCommerce service and its Shopify solutions. Send a short brief on the contact page. If you plan to open several markets, selling in several countries with Shopify Markets is a useful next read.

      Sources

      Written by
      ESTASOFT

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